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Factsheet #123 on Agriculture

July 9, 2013

Requirements for Farm Bill Reform in the House

Separating Food Stamps from Farm Programs Is a Prerequisite for Necessary Reform

  • Food stamps need to be completely separated from farm programs, and each should be considered on their own merits in two distinct bills. 

Necessary Reforms

No New Subsidy Programs: Shallow Loss and Reference Price Programs

  • The shallow loss program would impose an extreme shift in farm policy from providing a safety net to farmers to effectively guaranteeing most revenue.
  • As the American Farm Bureau Federation wrote in 2011, “A shallow loss program is a drastic departure from any previous farm policy design. Federal farm programs have traditionally existed to help farmers survive large, systemic losses. Shallow losses, however, can arise from a variety of systemic or individual sources and do not typically jeopardize the survival of a farm operation.”
  • The reference price program in the House farm bill was so extreme that it would have likely triggered payments to farmers as soon as the law went into effect.

Crop Insurance Reform Should Reduce Costs

  • The House bill would have outspent President Obama on the most expensive farm bill program: crop insurance. The House bill would add $8.9 billion more in costs and President Obama’s budget would cut $11.7 billion from this costly program.
  • As with other farm programs, there should be a cap on the amount of subsidies farmers can receive each year. The cap should be $40,000. According to the Government Accountability Office (GAO), such a cap would have saved taxpayers $1 billion in 2011 yet affected only 3.9 percent of farmers participating in crop insurance.
  • Taxpayers subsidize 62 percent of the premiums that farmers pay for crop insurance. This excessive subsidy should be rolled back to 2000 levels—before the Agricultural Risk Protection Act went into effect.

Repeal the Sugar and Dairy Programs

  • The sugar and dairy programs impose artificial limits on supply; thereby driving up prices. Government agencies have found that sugar and dairy prices are consistently higher than international prices.

Convert Food Stamps into a Work Activation Program

  • Converting food stamps into a work activation program is a crucial step in promoting self-sufficiency and personal responsibility among food stamp recipients.
  • If the 1996 welfare reform law is any indicator, a work requirement would significantly decrease dependence on food stamps and boost employment rates among recipients.

Other Critical Reforms

  • The existing 19 check-off programs that serve as a tax on producers and consumers should be eliminated.
  • The Market Access Program should be eliminated. Taxpayers should not have to subsidize a corporate welfare program to help wealthy companies with their overseas marketing.
  • The Conservation Reserve Program that pays farmers to remove land from agricultural use should be eliminated.

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